Colt Corporation purchased Massey Inc. and agreed to give stockholders of Massey Inc. 50,000 additional shares in 2020 if Massey Inc.'s net income in 2019 is $600,000 or more; in 2018 Massey Inc.'s net income is $615,000. Colt has net income for 2018 of $1,500,000 and has an average number of common shares outstanding for 2018 of 500,000 shares. What should Colt report as earnings per share for 2018? Basic EarningsPer Share ... Diluted Earnings Per Share1. $3.00 ... $3.002. $2.73 ... $2.733. $2.73 ... $3.004. $3.00 ... $2.73

Question

Wheeler

Business

26 February, 00:49

Colt Corporation purchased Massey Inc. and agreed to give stockholders of Massey Inc. 50,000 additional shares in 2020 if Massey Inc.'s net income in 2019 is $600,000 or more; in 2018 Massey Inc.'s net income is $615,000. Colt has net income for 2018 of $1,500,000 and has an average number of common shares outstanding for 2018 of 500,000 shares. What should Colt report as earnings per share for 2018? Basic EarningsPer Share ... Diluted Earnings Per Share1. $3.00 ... $3.002. $2.73 ... $2.733. $2.73 ... $3.004. $3.00 ... $2.73

+1

Answers (1)

Know the Answer?

Tamara · Answer 1

4. $3.00 ... $2.73

Explanation:

Basic EPS = Net income/average number of shares outstanding

= 1500000/500000

= $3 per share

Diluted EPS = 1500000 / (500000 + 50000)

= $2.73 per share

Therefore, Colt should report earnings per share for 2018:

Basic Earnings Per Share of $3

Diluted Earnings Per Share of $2.73